Sununu Sees Telecom Act Ready for Vote by Mid-2006

On the Universal Service Fund (USF), Sununu said that the fund is no longer cost-based has become “very problematic,” but he said his free market ideas on USF weren’t very pragmatic in light of the “populism of the Senate Commerce Committee… I don’t have any interest in being a free-market complainer.” USF wasn’t intended to “rewire affluent suburban schools,” a reference to the E- rate fund, nor keep prices low on “Ted Turner’s ranch” in N.M. He said it was “crazy” to apply USF taxes to urban families for the benefit of rural upper-class residents. Sununu said USF should be restricted to Americans who really need the subsidy.

Sununu also said rural telcos and state govts. have come to view USF and the access charge regime as an entitlement. “It’s become a problem in and of itself,” he said of such views. Sununu said even rural ILECs that get 40% of their revenue from access charges admit the “system is broken… some in public, most in private.” However, such admissions give him some hope, he said. “I feel good about the honesty in the debate,” Sununu said: “We will go to a system that’s much better rationalized.” He also said he was concerned that USF is collected and distributed by unelected officials. “Defenders of the fund don’t seem to be as bothered by this fact as I am,” he said. Sununu called the recent controversy over Anti- Deficiency Act regulation of E-rate and USF a case of “bait-and-switch” and said he didn’t agree with Congress’ action (through HR-5419) to exempt USF temporarily from ADA requirements.

Sununu also focused on Internet protocol (IP) enabled services. He said any bill should create a “fair-minded regulatory framework for IP-enabled services.” Such a framework can’t be product-specific, he said. Sununu also said any telecom bill shouldn’t create a special telecom court, as some have suggested, but it could include “cleaner mediation” requirements.

On conducting telecom reform, Sununu said incoming Senate Commerce Committee Chmn. Stevens (R-Alaska) and ranking Democrat Inouye (Hawaii) would conduct a series of sessions -- probably 6-8 -- to help determine which directions to go. These sessions likely won’t include corporations or interest groups, but rather “grassroots” and consumer organizations. These sessions will take about 5 months, after which staff will start drafting legislation. Sununu said he hoped a bill would be off the floor of both houses before 2006, and the conference report would be ready to vote on by June 2006. Sununu said that was his realistic timetable, though he hoped legislation would be ready sooner.

Sununu said the FCC’s UNE decision (CD Dec 16 p1) was “almost entirely bad news” for competitive carriers. “The FCC ruling will lead to higher cost structures [for CLECs,]” he said. “There’s no way to get around it.” Sununu said there needs to be an environment that encourages facilities-based competition. The FCC’s market-by-market approach on competitive issues will be “hard to sustain in the long term,” he said. While there are no easy answers, he said, he believes the FCC generally wants an environment that fosters facilities- based competition.

Sununu was asked his opinion of telcos that require consumers to take voice service along with DSL, perhaps to VoIP’s detriment. He answered that he is concerned about such practices that seemed “so 1960s… Those kinds of practices will slow deployment of broadband and IP services.” Such practices are putting the RBOCs in difficult positions, Sununu said. “That’s why the Bells are getting creamed,” he added, noting that the practice of using the wireless phone as a principal line was “just beginning.”